UPDATE 1-Corinthian says 7 pct programs fail new rule test

June 27

June 27 For-profit education company Corinthian
Colleges Inc said 7 percent of its programs did not
comply with new education rules, according to the latest data on
loan repayment by students released by the Department of
Education.

Under the gainful employment rule, at least 35 percent of
graduates and dropouts of programs must be paying back loans, or
their loan payments must equal 30 percent of discretionary
income or 12 percent of total earnings.

Schools that fail to meet this standard three years out of
four will no longer be allowed to accept students who pay with
federal loans.

Corinthian, which has been hit the most by the new rules,
said out of 44 programs that failed the test, the company has
stopped enrolling new students in 13 programs.

These 44 programs accounted for 5 percent of Corinthian's
graduates during the FY07-FY08 period, it said.

Corinthian said data released did not include 164 programs,
which passed the required metrics.

The data is an indication of future performance and would
not result in any regulatory action, as the rule only takes
effect in mid-2012.

On Tuesday, an analysis by an investment research firm
Height Analytics had estimated 13 percent of Corinthian's
programs failing the test.

Shares of Corinthian were up 2 percent at $2.59 on the
Nasdaq on Wednesday.